July 14, 2006

 

CBOT Soy Outlook on Friday: Down 2-4 cents; in step with overnight theme

 

 

Soybean futures at the Chicago Board of Trade are expected to start Friday's session easier, following the overnight theme as the market continues retreat from recent gains.

 

Soybeans are called to open 2 to 4 cents lower.

 

In e-CBOT trade, November soybeans slid 3 1/4 cents at US$6.18 3/4 per bushel.

 

Early market indicators are pointing lower, with overnight rains in parts of the western Midwest taking some edge off prices, but with intense heat seen for the crop belt into early next week, it may be tough to hold the declines over the course of the day, said a CBOT commission house broker.

 

Nevertheless, soybeans will continue to be a follower, watching activity in the neighboring corn and wheat markets as near-term weather conditions are less threatening to soybeans than corn and wheat at this point, traders add. Traders are expected to keep a close eye on weather forecasts however, with strength in outside inflationary markets supportive to prices.

 

Market technicians said soybean futures are regaining some downside technical momentum, even though no serious chart damage occurred Thursday. This week's high of US$6.39 1/2 - basis November futures - is very strong overhead resistance for the market to overcome. Futures will have to push prices above that level to gain any fresh upside technical momentum. The next downside price objective for the November contract is filling an upside price gap on the daily bar chart - meaning pushing prices below US$6.12 1/2.

 

First resistance for November soybeans is seen at US$6.29 - Thursday's high - and then at US$6.36. First support is seen at US$6.21 - Thursday's low - and then at US$6.17.

 

The DTN Meteorlogix Weather Service forecast said morning weather models are in fair to good agreement through day 6 (Wednesday), poor agreement during days 7-10 (Thursday-Sunday). Friday's European model wants to maintain a strong ridge over the middle Mississippi and lower Ohio river valleys with the jet stream dipping southward only into the Great Lakes. Friday's U.S. model maintains the ridge over the Midwest through Wednesday but then deepens a trough over the Midwest next Thursday and Friday and maintains this trough into the weekend. The U.S. model also features a good deal of thunderstorm activity over Iowa, Missouri, Illinois and Indiana late next week or during next weekend, Meteorlogix said.

 

Meanwhile, hot, dry weather is expected to stress reproductive soybeans during at least the next six days and possibly longer in the western Midwest. The eastern belt will encounter hot, dry weather that will begin to deplete the available soil moisture and increase stress to reproductive corn and soybeans during this weekend and through at least the middle of next week, Meteorlogix adds.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Friday, cash dealers said. Spot cash soybean bids were up 3 cents in Central, Ill., and up 5 cents in St. Louis, according to cash sources Friday.

 

The National Oilseed Processors Association said its members crushed 131.326 million bushels of soybeans in June. The average of analysts' estimates pegged the crush at 128.5 million bushels from a range of estimates that span between 126.0 million and 131.0 million bushels. Soyoil stocks were reported at 2.542 billion pounds compared to the average guess of 2.456 billion from a range of estimates between 2.408 billion to 2.503 billion. The yield on soyoil was 11.75 pounds per bushel. Analysts anticipated the yield to fall between 11.75 and 11.77 pounds per bushel.

 

In deliveries, a total of 693 delivery notices were redelivered against the July soybean future. The house account at Term Commodities topped 255 lots. The last trade date assigned was July 13. A total of 11 delivery notices were posted against July soyoil. The last trade date assigned was July 6.

 

Friday is the last trading day for July soycomplex futures.

 

Rotterdam soybeans were lower and soymeal prices were mostly lower. European vegoils were mixed.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly lower Friday in step with Thursday's losses in U.S. soybean futures, said an analyst. The benchmark September contract fell RMB26 to settle at RMB2,486 a metric tonne, after trading between RMB2,477 and RMB2,494/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Friday, boosted by a rally in crude oil prices. The benchmark September CPO contract ended at MYR1,498/tonne, up MYR7 from Thursday.